Bitcoin faced a significant decline on Friday, falling over 24% from its all-time high of more than $126,000 recorded last October. As the cryptocurrency dropped below $95,000 during the session’s lows, broader market fears about the Federal Reserve’s interest rate decisions further compounded the downward trend, despite Bitcoin trading above $96,000 during midday hours.
The recent downturn appears closely linked to substantial outflows from Bitcoin exchange-traded funds (ETFs), which reached their second-highest daily level on Thursday, according to Bloomberg data. This trend of decreasing interest in Bitcoin has persisted since a sharp sell-off last month, primarily fueled by leveraged liquidations and significant sales from long-term holders. Analysts at 10X Research noted that there is currently a lack of substantial new buyers entering the market, reinforcing the notion that Bitcoin is currently in a bear market.
The firm cautioned that if Bitcoin dips below the $93,000 mark, further losses could follow. Their analysis suggests that without an interest rate cut in December or any dovish shifts from the Federal Reserve in the coming months, the potential for a price rally appears bleak.
In a related statement, 10X Research expressed concerns about the possibility of a traditional “Bitcoin Christmas rally,” indicating that the Fed’s current posture likely diminishes such prospects. The sentiment is echoed by Fundstrat’s Sean Farrell, who conveyed a growing caution regarding the cryptocurrency market, emphasizing the absence of momentum and catalysts for growth.
Farrell elaborated that recent government shutdowns have exceeded investor expectations, and the anticipated liquidity boost from renewed government spending will take time to influence the economy positively. He speculated that a brief dip into the low $90,000 range for Bitcoin could act as a catalyst to rekindle buyer interest.
Market dynamics remain volatile, reflecting broader uncertainties as participants navigate the implications of fiscal policies and overall market conditions.
